Sewage-derived power supplies 22 percent of Severn Trent’s
energy, almost double that of 2005. At United Utilities, it’s 14
percent. British utilities are shifting fecal matter to vats of
bacteria that consume the waste, releasing biogas that’s burned
to drive water treatment. The result is lower energy bills and
surplus power sent to the grid that heat more U.K. tea kettles.

Water businesses in Britain aren’t the only ones finding
value in waste. Companies in Europe and China are turning more
to biogas to counter fossil-fuel costs and energy price
volatility. Microsoft Corp., the largest software maker, uses
effluents to help power a data center in Wyoming. Skiers in
northern Arizona speed down slopes on artificial snow made
entirely from treated wastewater.

“We live in a resource-constrained world, we’re going to
have to squeeze more and more out of our waste,” said
Christopher Gasson, the publisher of Global Water Intelligence
in Oxford, England. Sewage sludge “smells like money to an
increasing number of entrepreneurs.”

There are about 2,250 facilities in Europe now using sewage
sludge to produce biogas that can generate power, according to
the European Biogas Association.

Germany and Switzerland have the highest concentration with
980 and 463. The U.K. and Sweden have at least 100 each.

Berlin Water

Berliner Wasserbetriebe, Germany’s biggest water provider
that serves 3.7 million people in and around the capital, has
turned sewage sludge into power and heat for at least two
decades, said Stephan Natz, a spokesman.

Last year it produced 22 percent of the electricity the
utility consumed, mainly from sewage sludge. The company
produces power and heat from sewage sludge at all six of its
wastewater-treatment plants, Natz said on Feb. 18.

While Gasson estimates more than two-thirds of wastewater
utilities in northern Europe are investigating the technology
compared with less than 10 percent in 2008, that’s not quite the
case in the U.S.

American Water Works Co., the largest U.S. publicly traded
water company, has no plants that produce energy from sewage.
It’s being considered and is at a very preliminary stage of
discussion, the company said by e-mail in response to questions.

‘Minority Taste’

Sewage sludge is broken down in a process called anaerobic
digestion, which is also used to convert food waste into power.

Aqua America Inc., the second-biggest U.S. water utility by
market value, said it has one anaerobic digestion facility that
doesn’t produce electricity and they’re unlikely to build any
such plant for power.

“The technology remained a minority taste until about five
years ago,” according to Gasson of GWI, a U.K. market research
firm. Rising gas prices in Europe forced wastewater utilities to
focus on energy bills “at the same time renewable energy was
attracting serious investment: Anaerobic digestion technology
suddenly came back to life.”

The European Biogas Association and Gasson both say Europe
is leading the way with the most established market while China
is one of the fastest-growing areas.

Waste Streams

The proportion of wastewater collected and treated in China
more than doubled from 2004 to 2010 from 33 percent to 74
percent. The nation will spend about $68 billion to 2015
collecting and treating wastewater, showing “significant”
potential for energy from biogas, Gasson said.

By 2020, electricity produced from waste streams may be
equivalent to meeting the energy demands of about 2.5 million
British homes, or 10 percent of U.K. households, according to a
Ernst & Young LLP report that cites the think-tank CentreForum.

Water companies already treat about 66 percent of Britain’s
sewage sludge using this process.

The shift is a “mind-set change” as the industry starts
to view the by-product of the wastewater process as something of
value rather than an inconvenience that’s costly to dispose of,
said Mark Turner, water sector leader at Ernst & Young.

Pennon Group Plc through its Viridor Ltd. unit is investing
about 1 billion pounds to 2015 developing at least 300 megawatts
of facilities that turn waste from homes and businesses into
energy. That project pipeline will drive the company’s growth,
Chairman Ken Harvey said in November.

Biogas Beetle

United Utilities, which has biogas plants at 23 of its
sites, said this makes “good” business sense and it plans to
invest more. Diverting waste from landfills saves regional
provider Wessex Water Services Ltd. millions of pounds, it said.

Seeking to exploit rising landfill taxes, water businesses
are expanding their expertise to generate power from food waste.
Wessex Water built a food waste pre-treatment facility to help
chains find an alternative way to dispose of scraps.

Wessex Water said clients including supermarkets also ask
whether sewage-gas can be used to power their trucks. It showed
the technology by operating a Volkswagen Beetle car on biogas.

Severn Trent, based in Coventry, treats excrement from
about 4 million homes and businesses and turns it into
electricity equivalent to power 50,000 U.K. households. Wessex
Water said it produces sewage-derived electricity equivalent to
power 12,000 homes.

‘Delivering Value’

Southern Water Plc processes human waste equal to 1,120
Olympic-size swimming pools, plans to start four new plants in
2013, and Anglian Water Group Ltd. last year generated energy
equivalent to supplying 11,500 U.K. homes with power for a year.

“It’s about controlling our costs and ultimately
delivering value to our customers and it’s about doing the right
thing for the environment and the U.K. in terms of renewables
and carbon reduction,” said Jonathan Davies, general manager
for group business development at Severn Trent.

Severn Trent and Anglian Water have seen a cost-reduction
from their facilities partly through government incentives that
currently grant them two Renewable Obligation Certificates per
megawatt-hour of electricity produced, equating to about 82.96
pounds ($128) a megawatt-hour at current ROC prices.

Southern Water Ltd. exports about 10 percent of its
electricity and United Utilities last year fed 9 percent into
the grid.

Biogas gas be used as a fuel to generate electricity and
power cars as well as for heating and cooking.

Which means that “technically you could wake up one
morning and be cooking your breakfast with gas derived from
human waste,” said Mohammed Saddiq, general manager of Geneco,
Wessex Water’s clean-energy unit.

INSIGHT, DATA & NEWS ON THE TRANSFORMATION OF THE ENERGY SECTOR.
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